About the Authors

The publication of the European Union's (EU) Renewable Energy
and Climate Plan Package has prompted predictable calls for the
United States to agree to a similar package of binding targets and
market-interfering measures.[1] The EU's "20 20 by 2020" plan pledges that
by 2020, the EU will:

This plan would serve as a successor to the Kyoto Protocol,
which currently commits the EU to reducing 1990 emissions levels by
8 percent before 2012.

Following the failure of its flagship Emissions Trading Scheme
(ETS), EU emissions from relevant sectors actually rose by
0.8 percent from 2005 to 2006 and are well above the Kyoto goal.[3] The EU
has clearly not learned its lesson, as it plans to try once again
to regulate itself out of disaster at a predicted cost of €60
billion.[4]

EU elites have long used popular concern about the environment
as a way to promote the undemocratic European project, absent any
cost-benefit analysis or meaningful measures of success. The United
States cannot afford to bow to moral posturing by the European
Union. Instead, Washington should follow a truly pro-market
approach that avoids mandatory targets and focuses on technological
development.

The EU's History of Failure

The EU has long engaged in the politics of alarmism about
climate change and even used it to justify further centralization
of power under the European Reform Treaty.[5] The EU wants to globalize its
precautionary-based approach to risk management and even threatened
to boycott a key environmental conference in the U.S. if the
American hosts failed to agree to specific numbers for emissions
cuts.[6] The Guardian notes that the EU is
aiming for "the moral high ground" with its Climate Plan Package,
pledging to cut emissions by an additional 10 percent by 2020 if
the United States signs on to a Kyoto II deal.[7]

America should be wary of adopting European-style policies in
light of their documented failure. When the EU introduced the ETS
in 2005 as the main pillar of European climate policy, it claimed
to be a "world leader" in this area.[8] By December 2007, the trading
price of carbon completely crashed after it was revealed that
permits had been vastly over-allocated, and the project has since
been grossly discredited. However, it remains the primary policy
vehicle for achieving the goals of the Climate Plan Package.

Several NGOs and think tanks have warned that the next phase of
the ETS will not fare any better, because vast quantities of
imported credits agreed to under the Kyoto Protocol will grossly
distort the market.[9] Energy-intensive industries such the steel
and cement sectors have already threatened to move production
offshore.[10] An in-depth study of the ETS by
British-based think tank Open Europe concluded:

…Far from creating a credible basis for EU level action
on climate change, the ETS has instead established a web of
politically powerful vested interest groups, massive economic
distortions and covert industrial subsidies. It will do practically
nothing to fight climate change.[11]

The ETS is fundamentally flawed because it puts the cart before
the horse: It demands greenhouse gas emissions reductions well
before the technologies capable of economically meeting them exist.
The result is either ruinous economic consequences or failure to
reduce emissions via continued over-allocation of permits. The EU
originally chose the latter and is now choosing the former.

America's Record

Ironically, the U.S, which is not a party to the Kyoto Protocol,
is actually amassing a better track record than most of the Western
European and other industrialized nations that have ratified Kyoto.
Since 2000, emissions from Western European nations have been
rising more than twice as fast as those in the U.S.[12] If
anything, the EU should be looking toward the U.S. for ideas, not
the other way around.

However, current U.S. policy and the EU Climate Plan Package do
have one feature in common: ever-expanding biofuels mandates. This
is proving to be a transatlantic blunder. Biofuels--largely
corn-ethanol in the U.S. and biodiesel in Europe--have increased
both the cost of driving and the cost of food as more cultivated
acres are being devoted to energy production. Furthermore, this
economic harm is not offset by environmental benefits. In fact, a
number of environmental organizations and academics have concluded
that biofuels production harms the economy and may actually
increase greenhouse gas emissions.[13]

Unrealistic Targets and Fundamental
Flaws

The proposals for "fighting climate change" announced on
Wednesday by an array of EU commissioners make Stalin's
Five-Year Plans look like a model of practical politics.

Not only is there serious concern about the second phase of the
ETS, but many other parts of the EU's Climate Plan Package are
highly questionable.

Under the Plan, Britain has pledged to increase its use of
renewable energy to 15 percent from the current level of about 1
percent.[15] Remarkably, nuclear power will not be
allowed to constitute any part of that target. As The Heritage
Foundation's Jack Spencer notes, nuclear fuel reprocessing is safe,
affordable, clean, and technologically feasible.[16]

Meeting its renewables target without nuclear fuel reprocessing
will be a multibillion-dollar experiment that will require the
government to build tens of thousands more wind turbines, including
up to 7,000 offshore giant turbines.[17] As British writer
Christopher Booker notes, "To build two turbines a day, nearly as
high as the Eiffel Tower, is inconceivable."[18] With prohibitive
financial costs, unreliable technology, and public opposition, the
British plan does not make for effective or efficient environmental
policy.

In order to prop up the regional carbon market, EU President
Jose Manuel Barroso has threatened to impose a European "green tax"
on imports from countries that are not part of a future Kyoto
Protocol-style deal.[19] Having failed to sign the U.S. up to its
growth-sapping measures through moral posturing alone, the EU is
ready to compel them this time around. Furthermore, any such
trade-interfering measure is likely to includeblatant acts of
protectionism.

The BBC has described such tariffs as "the nuclear bomb of
climate negotiations,"[20] and they would have a profoundly negative
effect on transatlantic relations. Rather than equalize trade, they
will simply distort it. The United States should send Europe the
message that it will not tolerate such a move and will challenge it
at the World Trade Organization if necessary.

What America Should Do

The U.S should be learning from the EU experience--as a
cautionary tale. Despite the near impossibility of meeting the
Kyoto targets, the EU is extending the Kyoto/ETS approach well into
the future. This is shaping up to be little more than a
charade--making even bolder promises about the future while failing
to meet current emissions goals.

As it stands, the European Environment Agency concedes that
"[b]ased on past emissions, the EU-15 is not on track to reach its
Kyoto target."[21] Some nations, like Germany and the U.K.,
are going to meet their targets, but only because the baseline
year--1990--is favorable to them. At that time, East Germany (as
well as other former communist states) was beginning the process of
shutting down high-polluting industries. Also, the U.K. was in the
process of switching from coal to lower-emitting natural gas as a
source of electric generation. Thus, both countries were well below
their 1990 targets by the time the Kyoto Protocol was created in
1997. Nonetheless, these nations, as well as most others in the EU,
have been seeing their emissions trending upwards since the signing
of Kyoto, and the EU-15 overall is not on track to meet its
commitments.[22]

The Bush Administration has rightly recognized that it is time
to turn the page on Kyoto and has launched an alternative. Bringing
together the U.S., other major emitting nations (including major
developing nations like China and India that have no requirements
under Kyoto), and the EU and the UN, the Major Economies Meeting on
Energy Security and Climate Change is wrapping up its latest round
of discussions in Honolulu, Hawaii. Unlike Kyoto, this process
hopes to end not with putatively binding caps, but with an
agreement that would more closely resemble what the U.S. is already
doing. The agreement would set more flexible goals, and each nation
would work toward its own goals and fashion its own compliance
mechanisms.

In concert with this process, the Administration has also
spearheaded the Asia Pacific Partnership on Clean Development and
Climate, an agreement by which both developed and developing
nations can coordinate the creation and deployment of clean
technologies. In addition, the President asked Congress in his
final State of the Union Address to establish a new clean energy
technology fund.

This is a more flexible and workable approach than Kyoto and the
EU's proposed successor to it. Rather than trying to ratchet down
emissions with existing technologies--something that is proving to
be both elusive and prohibitively expensive--the Administration's
approach focuses on developing the next generation of energy
technologies that emit less carbon. Each nation would then
determine when and to what extent it will deploy these
technologies. This strategy would not lock nations into promises
that would be difficult to meet and that, based on the ongoing
climate change science, may prove to be costlier than the
problem.

Conclusion

The British government originally opposed giving the European
Union further authority in the field of energy but has since lost
the argument and signed away further powers under the Lisbon
Treaty.[23] It is not difficult to see why Britain
opposed such a centralization of power. The EU's energy policy has
gone from the sublime to the ridiculous, with gesture politics
transformed into costly and damaging proposals. Energy companies
pocketed enormous windfall profits from the failure of the first
phase of the ETS, and governments have refused to ring-fence
profits from the second phase for investment in cleaner
technologies, defeating the very object of the exercise.[24]

Any U.S. effort short of signing an EU-dictated international
agreement with binding targets will not be acceptable to EU elites.
The EU has an energy agenda focused on achieving a political and
moral victory over the United States rather than one of sound
science. The United States should not be bullied into accepting
policymaking on this basis and should continue to explore
affordable ways to enact sensible environmental policies.

For its part, the British government must take a more realistic
look at what it can achieve on a cost-benefit basis and should
refuse to endorse a package that is not commensurate with its
national interest.[25]

Sally McNamara is Senior
Policy Analyst in European Affairs in the Margaret Thatcher Center
for Freedom and Ben
Lieberman is Senior Policy Analyst in Energy and the
Environment in the Thomas A. Roe Institute for Economic Policy
Studies at The Heritage Foundation.

[5]The
Reform Treaty inserts the following as an additional item not
previously contained in the EU Constitution: "promoting measures at
international level to deal with regional or worldwide
environmental problems, and in particular combating climate
change." See Treaty of Lisbon amending the Treaty on European Union
and the Treaty establishing the European Community, Brussels,
December 3, 2007, Article 174(a), at www.consilium.europa.eu/uedocs/cmsUpload/cg00014.en07.pdf.